David Ogilvy, once said, “I do not regard advertising as entertainment or an art form, but as a medium of information.” And the Internet is a powerful medium for information dissemination. The growth of the Internet over the last decade or so has been tremendous. By the end of 1999 there were 259 million Internet users and this is expected to increase to 490 million by 2002.
The US has the largest share of Internet users today, at 43 per cent, but by year 2005 this is expected to decline to 27 per cent the reason is that most of the Asian countries, including India, are experiencing tremendous growth rate amongst their Internet user base.
Though India currently ranks sixth amongst the Asian countries with an Internet user base of 3.1 million (penetration of mere 0.3 per cent of the population), by 2003, the user base is expected to increase to 70 million, a compounded annual growth rate (CAGR) of 130 per cent (and a penetration of 6 per cent of the population).
This should expand the role of the Internet from an information dissemination medium to a medium of trade, which encompasses advertising, marketing and e-commerce.
According to Goldman Sachs’ estimates on the Internet in India, the online advertising business is expected to increase from the current $ 3 million to $ 150 million by 2003 (a growth rate of almost 180 per cent).
The share of online advertising, currently estimated to be 0.2 per cent of the total advertising pie is expected to increase to 4.4 per cent by 2003 (a growth rate of 122 per cent). These estimates only indicate the extent to which Internet is likely to be used by marketers to advertise their products and services.
Many may argue that online advertising can never substitute offline advertising, which comprise more traditional and established media like television and press. However, the Internet does offer certain unique benefits.
For example, let us consider the case of a large financial institution wanting to market its new housing loan scheme. As we all know, the end consumer for this product would be an adult having a steady flow of income and wanting to invest in a house. The medium of advertising available to this company is television, newspapers, magazines and the Internet.
Take the case of both television and print. Being mass media, they have a phenomenal reach but suffer from lack of ‘focused reach’. The advertisements for the loan scheme will not only be seen by the potential target consumers, but also by a large proportion of the audience who are not the target consumers.
For the company, this means a waste of valuable resources (time and money). But if the company were to choose to advertise on the Internet, not only has it the option of choosing the specific websites or channels, but also can focus only on potential end consumers, and thereby increase the effectiveness of the campaign.
Also, since the advertisement campaign is being targeted at a select group of end consumers, the measurement of return on investment (ROI) also becomes quite easy. This again establishes the Internet as a measurable medium of advertising.
Online advertising, in its true sense can be seen as a convergence of ‘traditional advertising’ and ‘direct marketing’.
It holds four key advantages:
Online advertisers now have access to a new range of targeting technology. They can now target their advertisements to prospective consumers geographically (city, state or country), as well as, by time of the day, day of the week, computer platform or the kind of browser being used. Further profile-based and behaviour-based targeting is also possible.
Technological expertise available with online advertisers allows them to track the performance of their advertising and marketing campaigns. They can track the performance of an advertising campaign hourly, daily or weekly by measuring the click- through rates (which is the response to the advertisement).
Besides this, marketers can also understand the effect of the advertisement on traffic to the site, purchase behaviour or simply the overall-browsing pattern.
Imagine an online advertisement for a software product being marketed by a leading info-tech company. Any interested user can click on the advertisement, flip through the product specifications, download the test version and, if satisfied, can always buy the product. This unique advantage of ‘consumer involvement’ is possible only in an online environment as compared to the other traditional media.
Deliverability and Flexibility:
In an online environment, the advertisements can be delivered to any location in real time, around the clock. Using the tracking system, advertisers get the flexibility to track the performance of advertisements and change them, if required, in a very short period of time.
This is not possible either with print (as we will have to wait for a fresh print run) or with television where the high production costs make any changes prohibitively expensive.
The growth rates that online advertising is experiencing has not only enthused marketers and advertisers, but has also created agencies and companies which specialize in using technology to understand the ‘Internet user profile’ in a better way.
In the US on the one hand, companies such as Media Matrix, Net Value and Nielsen Net Ratings use their research and software expertise to capture the profile data of an Internet user.
On the other hand, companies such as Double Click have developed technology which helps advertisers not only choose the websites and the channels on which they would like to advertise, but also the exact profile of the target audience for their product or service.
In India, however the technology boom has led to the launch of many online advertising solution companies, which use the data from the ‘log” files obtained from the servers of different websites, the IP (Internet protocol) address-based information and combine it with the profile of registered users of that website to target their ads to various target segments.
These companies use the technological knowhow along with their media planning expertise to advise marketers on their online advertising strategies.
Though the information available with these online advertising solutions companies is quite sufficient, a need for a better understanding of the ‘demographic and psychographic’ profile of an Indian Internet user is felt.
Leading consumer market research agencies are trying to fill this information gap through their periodic offline surveys. These surveys typically take 2-3 months to complete and for findings to be reported. In the Internet world this would be ancient. Therefore, the need for online real-time profiling of Internet user still remains.
As Leo Burnett, once said, “Good advertising does not just circulate information. It penetrates the public mind with desires and belief.” Combine this with ‘focus’ and ‘measurability’ of the Internet and this gives most advertisers and marketers a potential strategic weapon in their armour.